Stronger in a Weak Market Agenda Q4 Earnings Release & Capital - - PowerPoint PPT Presentation

Stronger in a Weak Market

Q4 and Preliminary Full Year 2016 Results Capital Markets Day

Oslo, February 16, 2017

Agenda Q4 Earnings Release & Capital Markets Day

Time Event

08:30 Q4 2016 results and CMD financials

Gottfred Langseth, EVP & CFO

09:05 PGS and market perspectives

Jon Erik Reinhardsen, President & CEO

09:30 Q&A 10:00 Coffee break 10:15 MultiClient

Sverre Strandenes, Executive Vice President MultiClient

10:35 Marine Contract & Operations

Per Arild Reksnes, Executive Vice President Operations

11:05 Imaging & Engineering

Guillaume Cambois, Executive Vice President Imaging & Engineering

11:25 Concluding remarks

Jon Erik Reinhardsen, President & CEO

11:30 Q&A 11:45 Lunch

• 2-

Gottfred Langseth

EVP & CFO

Q4 and Preliminary Full Year 2016 Results

Oslo, February 16, 2017

Cautionary Statement

• This presentation contains forward looking information
• Forward looking information is based on management

assumptions and analyses

• Actual experience may differ, and those differences may be material
• Forward looking information is subject to significant uncertainties and

risks as they relate to events and/or circumstances in the future

• This presentation must be read in conjunction with the press release

for the fourth quarter and preliminary full year 2016 results and the disclosures therein

• The Company uses Alternative Performance Measures (“APMs”) .

Disclosures required under the guidelines issued by the European Securities and Markets Authority (ESMA) are included in the Company’s financial reports

• 4-

• 2016 EBITDA of USD 313.3 million
• Industry leading MultiClient performance

– Pre-funding level of 121% – Full year sales-to-investment of 2.3 times, up from 1.9 times in 2015 – Late sales up 17% compared to 2015

• Refinancing completed

– Gross equity proceeds of ~ USD 260 million – Reduced debt – Maturities extended to 2020

• Gross cash cost further reduced by ~ USD 131

million compared to 2015

• Ramform Tethys delivered – moderate remaining

capital expenditure to complete new build program in Q1 2017

Strong Full Year MultiClient Performance Refinancing Successfully Completed

Capital structure better aligned to market conditions

• 5-

Financial Summary

Revenues EBITDA* EBIT** Cash Flow from Operations

*EBITDA, when used by the Company, means EBIT excluding other charges, impairment and loss on sale of long-term assets and depreciation and amortization.. **EBIT excluding impairment and loss on sale of long-term assets and other charges.

• 6-

Consolidated Statement of Profit and Loss Summary

*EBITDA, when used by the Company, means EBIT excluding other charges, net, impairment and loss/gain on sale of long-term assets and depreciation and amortization. The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited fourth quarter and preliminary full year 2016 results, released on February 16, 2017.

• Market and capacity driven revenue decline of 21% in 2016
• High tax expense for Q4 and full year 2016 since a USD 50 million valuation

allowance/write down is recorded for deferred tax assets in Norway and UK

Q4 Q4 Full year Full year USD million (except per share data) 2016 2015 2016 2015 Revenues 154.1 229.3 764.3 961.9 EBITDA* 53.1 116.5 313.3 484.4 Operating profit (loss) EBIT ex impairment and other charges (65.5) (22.9) (137.5) 15.8 Operating profit (loss) EBIT (92.4) (332.9) (180.3) (430.4) Net financial items (26.3) (24.3) (82.6) (75.2) Income (loss) before income tax expense (118.7) (357.1) (262.8) (505.5) Income tax expense (37.4) 22.5 (31.2) (22.4) Net income (loss) to equity holders (156.1) (334.6) (293.9) (527.9) EPS basic ($0.61) ($1.48) ($1.21) ($2.43) EBITDA margin* 34.5 % 50.8 % 41.0 % 50.4 % EBIT margin ex impairment and other charges

• 42.5 %
• 10.0 %
• 18.0 %

1.6 %

• 7-

Impairments and Other Charges

• Summary of impairments and other charges impacting Q4 and full year 2016
• The refinancing completed in Q4 2016 had limited net impact on the profit and loss statement

– USD 10.6 million gain on repurchase of USD 212 million of the 2018 Senior Notes at 95% of par – USD 2.8 million of expensed debt related transaction cost – USD 6.3 million write off related to pre-existing deferred loan cost related to debt refinanced before the initial maturity

Q4 Full year USD million 2016 2016 Impairment of property and equipment (7.8) (12.0) Impairment of MultiClient library (21.0) (30.1) Provision for onerous contracts (Other charges) 2.4 3.7 Currency devaluation loss Egypt and Nigeria (Other financial expense) (4.9) (10.1) Increased valuation allowance for deferred tax assets (Income tax expense) (50.0) (50.0)

• 8-

Q4 2016 Operational Highlights

• Total MultiClient revenues of USD 103.4 million

– Pre-funding revenues of USD 50.9 million – Pre-funding level of 107% on USD 47.8 million of MultiClient cash investments – Average MultiClient pre-funding level over the last two years exceeds the 80-120% target level – Late sales revenues of USD 52.4 million

• Marine contract revenues of USD 29.3 million reflecting low pricing, more non-

chargeable vessel time and limited capacity allocated to contract work Contract revenues MultiClient revenues

Targeted pre-funding level 80-120%

• 9-

MultiClient Revenues per Region

Pre-funding and Late Sales Revenues Combined

• Q4 pre-funding revenues

were highest in Asia-Pacific and Europe

• Q4 late sales revenues

were highest in Europe and North America

• Regional and quarterly

variability expected to continue

• 10-

MultiClient Vintage Distribution

• MultiClient library book value of

USD 647.7 million as of December 31, 2016

– Down from USD 695.0 million at y/e 2015

• Moderate net book value for

surveys completed 2011-2015

• 2016 amortization expense of

USD 293.8 million

– 63% of sales

• 2016 impairment charge of USD

30.1 million

• 11-

**EBITDA, when used by the Company, means EBIT excluding other charges, net, impairment and loss/gain on sale of long-term assets and depreciation and amortization. The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited fourth quarter and preliminary full year 2016 results released on February 16, 2017.

Key Operational Numbers

USD million Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Contract revenues 29.3 54.2 69.9 59.2 43.5 77.3 84.4 68.8 MultiClient Pre-funding 50.9 84.3 47.2 59.9 98.0 83.8 112.0 86.6 MultiClient Late sales 52.4 63.2 46.0 65.3 67.5 36.6 33.5 56.7 Imaging 19.6 16.0 17.9 16.6 18.2 21.7 23.5 30.3 Other 1.9 6.4 2.1 2.1 2.2 6.3 2.4 8.7 Total Revenues 154.1 224.1 183.0 203.1 229.3 225.7 255.8 251.1 Operating cost (101.0) (111.4) (114.2) (124.6) (112.8) (110.4) (130.7) (123.5) EBITDA* 53.1 112.7 68.8 78.6 116.5 115.3 125.1 127.5 MultiClient amortization and impairment (97.6) (86.2) (62.9) (68.1) (101.8) (78.7) (74.6) (72.5) Depreciation and amortization of long-term assets (excl. MC library) (42.0) (31.9) (42.1) (40.7) (37.6) (27.4) (34.5) (41.6) Impairment and loss on sale of long-term assets (excl. MC library) (7.8) (9.2) (4.2) (274.9) (65.3) (56.9) 0.0 Other charges, net 1.9 3.1 (4.2) (1.4) (35.1) (6.5) (4.7) (2.7) EBIT (92.4) (11.5) (44.6) (31.6) (332.9) (62.7) (45.7) 10.9 CAPEX, whether paid or not (28.7) (19.0) (51.9) (108.9) (41.7) (17.0) (63.3) (41.5) Cash investment in MultiClient (47.8) (63.0) (41.8) (48.3) (70.2) (95.5) (73.6) (64.0) Order book 215 190 230 204 240 245 259 394 2016 2015

• 12-

Vessel Utilization*

Seismic Streamer 3D Fleet Activity in Streamer Months

• 52% active vessel time

in Q4 2016

– Significant vessel standby due to the weak market and seasonality

• Vessel utilization to be

significantly higher in Q1 2017

• Relatively low MultiClient

share of 3D fleet in Q1 2017

– Approx. 25% of active vessel time

* The Q4 2016 vessel allocation excludes cold-stacked vessels.

• 13-

Order Book

• Order book of USD 215

million by end Q4 2016

• Vessel booking*

– ~100% booked for Q1 2017 – ~80% booked for Q2 2017 – ~30% booked for Q3 2017 – ~15% booked for Q4 2017

*As of February 10, 2017, based on 7 active vessels in Q1 and 9 active vessels in Q2, Q3 and Q4 2017.

• 14-

Group Cost* Focus Delivers Results

*Gross cash costs are defined as the sum of reported net operating expenses (excluding depreciation, amortization, impairments and other charges/(income)) and the cash

• perating costs capitalized as investments in the MultiClient library as well as capitalized development costs.

190 274 269 288 281

• Strong cost performance

continues

• Q4 operating costs impacted

by reduced project related costs due to warm stacking and standby

• Full year 2016 gross cash

cost ended at USD 662 million, down USD 131 million versus 2015

208 209 186 175 158 177 152

• 15-

Consolidated Statements of Cash Flows Summary

• Cash flow from operating activities higher than reported EBITDA for both Q4 and

full year 2016 reflecting reduced working capital

• USD 207.8 million negative 2016 cash flow before financing activities primarily

driven by new build capex of USD 154.4 million

• Limited new build capex in Q4 2016; final new build instalment due in Q1 2017

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited fourth quarter and preliminary full year 2016 results released February 16, 2017.

Q4 Q4 Full year Full year USD million 2016 2015 2016 2015 Cash provided by operating activities 64.7 121.0 320.9 487.9 Investment in MultiClient library (47.8) (70.2) (201.0) (303.3) Capital expenditures (25.9) (47.2) (218.2) (164.0) Other investing activities (7.0) (14.0) (109.5) 40.4 Net cash flow before financing activities (16.0) (10.4) (207.8) 61.0 Financing activities 0.4 9.7 187.9 (34.1) Net increase (decr.) in cash and cash equiv. (15.6) (0.7) (19.9) 26.9 Cash and cash equiv. at beginning of period 77.3 82.3 81.6 54.7 Cash and cash equiv. at end of period 61.7 81.6 61.7 81.6

• 16-

Balance Sheet Key Numbers

The accompanying unaudited financial information has been prepared under IFRS. This information should be read in conjunction with the unaudited fourth quarter and preliminary full year 2016 results released on February 16, 2016.

• Liquidity reserve of USD 271.7 million

– Does not include the ~USD 35 million from the subesquent equity offering since this was completed after year-end

• Gross interest bearing debt reduced by ~USD 195 million in Q4 as a result of the

successful refinancing

• Total leverage ratio of 3.94:1 as of December 31, 2016, compared to 3.96:1 as of

September 30, 2016

• Shareholders’ equity at 48% of total assets, up from 43% in Q3 2016

December 31 September 30 December 31 USD million 2016 2016 2015 Total assets 2 817.0 2 988.5 2 914.1 MultiClient Library 647.7 682.1 695.0 Shareholders' equity 1 359.4 1 285.7 1 463.7 Cash and cash equivalents (unrestricted) 61.7 77.3 81.6 Restricted cash 101.0 100.2 71.6 Liquidity reserve 271.7 417.3 556.6 Gross interest bearing debt 1 191.4 1 386.1 1 147.2 Net interest bearing debt 1 029.7 1 208.6 994.2

• 17-

Gottfred Langseth

Executive Vice President & CFO

Capital Markets Day – Stronger in a Weak Market

Oslo, February 16, 2017

Cautionary Statement

• This presentation contains forward looking information
• Forward looking information is based on management

assumptions and analyses

• Actual experience may differ, and those differences may be

material

• Forward looking information is subject to significant

uncertainties and risks as they relate to events and/or circumstances in the future

• This presentation must be read in conjunction with other

financial statements and the disclosures therein

• 19-

Disclaimer

The information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and

• uncertainties. The Company is subject to a large number of risk factors

including but not limited to the demand for seismic services, the demand for data from our MultiClient data library, the attractiveness of our technology, unpredictable changes in governmental regulations affecting our markets and extreme weather conditions. For a further description of other relevant risk factors we refer to our Annual Report for 2015. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward looking statements. The reservation is also made that inaccuracies or mistakes may occur in the information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and PGS disclaims any and all liability in this respect.

• 20-

Financial Review - Outline

• Refinancing completed

– Transaction summary – Debt structure

• 2017 guidance

– Cost development – CAPEX trends – MultiClient investments and pre- funding trends

• Cash flow
• Summary
• Appendix

– Tax – Sensitivities

• 21-

Senior Notes Exchange Offer Equity Issue

Refinancing Completed: Transaction Summary

RCF Extension

• Completion of two year extension of RCF to 2020

– Resized RCF to match ongoing liquidity needs (i.e. USD 400 million with a step down to USD 350 million in September 2018) – Unchanged security package – Covenant reset to retain availability of liquidity reserve going forward

• Exchange offer for USD 450 million 2018 Notes completed with 94% acceptance

– USD 212 million (nominal value) redeemed at a price of 95% of par – USD 212 million exchanged into new Senior Notes maturing December 2020 (terms otherwise substantially unchanged) – USD 26 million of original 2018 Notes left outstanding

• USD ~225 million Private Placement

– 85.5 million new shares at NOK 22.50 – Placed with minimal discount and substantial over subscription

• USD ~35 million Subsequent Offering completed January 2017

– 13.5 million new shares offered to existing shareholders not participating in Private Placement ✓ ✓

Improved balance sheet flexibility and increased long term financial visibility

✓

• 22-

Refinancing Completed: Revolving Credit Facility Extended to 2020

Term Agreement Maturity: September 2020 (2 year extension) Amount: USD 400 million, reducing to USD 350 million from September 2018 Security Package: Unchanged Interest Cost (drawn): Libor + margin of 325-625 bps (depending on Total Leverage Ratio “TLR”) + utilization fee Maintenance Covenant: TLR: ≤ 5.50x, to Q2-2017, 5.25x Q3-17, 4.75x Q4-17, 4.25x Q1-18, thereafter reduced by 0.25x each quarter to 2.75x by Q3-19

• 23-

Refinancing Completed: Key Effects of the Transactions

Deleverage balance sheet 1

Refinancing improves balance sheet flexibility and creates runway to 2020

Highlights Key Effects

Annual interest cost Senior Notes 4

Interest savings of ~USD 15.6 million p.a.

Reduce financial risk profile 3 Capital

market debt (USDm) USD 424m debt repaid or termed out

Maintain robust liquidity position* 2

• Reduced debt as equity

proceeds were primarily used for deleveraging

• Liquidity reserve benefits

from RCF extension to 2020

• Projected interest cost

savings related to Senior Notes to December 2018 of USD 31.2 million from buy back

*Adjusted for USD 35 million in proceeds from Subsequent Offering

• 24-

Summary of Debt and Drawing Facilities

Long term Credit Lines and Interest Bearing Debt Nominal Amount as

• f

December 31, 2016 Total Credit Line Financial Covenants

USD 400.0 million Term Loan (“TLB”), Libor (minimum 0.75%) + 250 basis points, due 2021 USD 389 million

None, but incurrence test: total leverage ratio ≤ 3.00x*

Revolving credit facility (“RCF”), due 2020

Libor + margin of 325-625 bps (linked to TLR) + utilization fee

USD 190.0 million USD 400.0** million

Maintenance covenant: total leverage ratio ≤ 5.50x, to Q2-2017, 5.25x Q3-17, 4.75x Q4-17, 4.25x Q1-18, thereafter reduced by 0.25x each quarter to 2.75x by Q3-19

Japanese ECF, 12 year with semi-annual

• instalments. 50% fixed/ 50% floating interest

rate USD 374.4 million USD 465.6 million

None, but incurrence test for loan 3&4: Total leverage ratio ≤ 3.00x* and Interest coverage ratio ≥ 2.0x*

December 2018 Senior Notes, coupon of 7.375% USD 26.0 million December 2020 Senior Notes, coupon of 7.375% USD 212.0 million

None, but incurrence test: Interest coverage ratio ≥ 2.0x*

*Carve out for drawings under ECF and RCF. **Reducing to USD 350 million in September 2018.

• 25-

Debt and Facility Maturities Further Extended

RCF USD 500m due Sep. 2018 RCF USD 400m* due Sep. 2020 Term Loan B USD 394m due June 2021 Japanese Export Credit USD 182m due 2025 Japanese Export Credit USD 203m due 2025 Senior Notes USD 212m due Dec 2020

Average remaining maturity of loan facilities

4.1 years 4.2 years

Term Loan B USD 389m due June 2021

• Average remaining time to

maturity increased to 4.2 years while debt level is decreased

• Proactive and robust financial

cycle management

Senior Notes USD 450m due Dec 2018

Undrawn Undrawn

Japanese Export Credit USD 297m due 2027

Undrawn

Japanese Export Credit USD 283m due 2027

Senior Notes USD 26m due Dec 2018

*Reducing to USD 350 million in September 2018.

• 26-

2017 Guidance

• Group gross cash cost ~USD 700 million

– Of which ~USD 275 million to be capitalized as MultiClient cash investments

• MultiClient cash investments ~USD 275 million

– Pre-funding level of ~100% – Active 3D vessel time planned for MultiClient of ~55%

• Capital expenditures of ~USD 150 million

– Of which new build capex of ~USD 85 million

• Gross cash interest expense of ~USD 55 million

– Of which ~USD 10 million expected to be capitalized to the MultiClient library

• 27-

Cost Discipline Remains a Key Priority in 2017

• 2016 gross cash cost more than 40% lower than in 2014
• 2017 cash cost of ~USD 700 million – modest increase from structurally lower level

mainly attributable to:

– More operated capacity with full year operation of Ramform Tethys and delivery of Ramform Hyperion – Expected increase of fuel prices

• Tight cost control continues

*Estimate based on a stable USD against the blend of currencies in PGS cost base.

• 28-

Solid MultiClient Pre-funding

• 2016 MultiClient cash

investments of USD 201 million with a pre-funding level of 121%

• MultiClient cash investments in

2017 expected to be ~USD 275 million

• 2017 pre-funding level

expected to be ~100%

• Approx. 55% of 2017 active 3D

fleet capacity currently planned for MultiClient

– Less in the first part of 2017 with 25% of active time scheduled in Q1

• 2017 MultiClient amortization

expense expected to be in the range of USD 350-375 million

• 29-

Capital Expenditure Trends

• Full year 2016 capex of USD 208.6

million

– USD 31.4 million down from initial plan – USD 154.4 million relates to new builds

• 2017 CAPEX plan of ~USD 150 million

– New build CAPEX of ~USD 85 million fully covered by Export Credit Financing – Following recent fleet renewal PGS will not embark on new builds for the foreseeable future

• Gross depreciation cost is expected to

be ~USD 230 million in 2017

–

• Approx. USD 100 million to be capitalized

as part of MultiClient investments

• 30-

Required EBITDA to be Cash Flow Breakeven in 2017

• 2016 EBITDA of USD 313.3 million
• EBITDA of ≥USD 400 million required

to be cash flow breakeven in 2017, excluding:

– Amortization of ECF and TLB loans (USD ~50 million) – New build capex (separately financed) – Working capital changes

Cash Interest expense (~USD 55m) Maintenance capex (~USD 65m) MultiClient investments (~USD 275m)

Cash tax and cap.dev. cost

• 31-

Addressing Financial Challenges: Stronger in a Weak Market

• Successful refinancing demonstrates

PGS’ strong standing in the industry and capital markets

• Tight cost and capex control continues
• Cash flow better balanced after

completion of new build program early 2017

• Solid MultiClient performance with high

cash generation

• Flexibility to handle market volatility

Proactive Financial Management in a Weak Market

• 32-

Appendix: PGS’ Tax Position

• Substantial tax assets will benefit current tax expense for

future years

• Tonnage Tax regimes

– PGS’ vessels are owned by companies within tonnage tax

• regimes. In profitable years, this will have a positive impact on

tax expense; in loss-making years the impact will be negative

• Current tax/cash tax has typically been in the range of

USD ~10-35 million annually

– Mainly withholding taxes and local taxation in countries of

• peration where PGS has no deferred tax assets

– Will vary depending on area of operation – The tax expense in the cash flow statement is the cash tax paid in the period, while in the P&L it is the incurred tax expense, whether paid or not

• Effective tax rate

– Fluctuates for various reasons: foreign exchange movements, utilization and recognition of deferred tax assets, area of

• peration, impact from tonnage tax regimes and other

permanent differences – In a «mid cycle» market an average effective reported tax rate around 25% or below should be achievable – Higher in years with low profitability since a significant portion

• f current taxes is based on gross amounts (e.g. withholding

taxes and revenue based taxes)

• 33-

Appendix: Foreign Exchange and Sensitivity

• On an annual basis:

– A 10% change of the USD vs. NOK has an annual net EBIT impact of USD 15-20 million before currency hedging activities. A 10% change vs. GBP has an effect of USD 7-9 million

• The Company hedges:

– Material monetary balance sheet items in non-USD currencies – Specific material firm commitments, e.g. ship building contracts – Operational cash flow up to the duration of the contract order book

• Current hedging positions:

– To hedge material monetary balance sheet items

• Currently ~NOK 120 million and GBP 29 million bought on

forward contracts

• Hedge of BRL 142 million in place against the exposure

arising from cash deposit held in Brazil (~65% of the deposit) plus monetary balance sheet items – To hedge specific material firm commitments NOK 265 million bought forward

.

• 34-

Appendix: Key Sensitivities

• Technical downtime/mobilization delays/standby

– One month for high capacity vessel could amount to a revenue loss of USD 4-8 million + risk of schedule impact and equipment cost – Standby will reduce vessel cash cost by USD 0.75-1 million per vessel month, depending on duration and lead time

• Contract versus MultiClient

– In the current market there is normally a positive EBITDA impact of changing 3D capacity from Contract to MultiClient assuming that pre-funding is around 100% of capitalized MultiClient cash investments

• MultiClient late sales

– Sensitive to oil price, legislative changes and license rounds – Regional variability from quarter to quarter

• Fuel price

– 10% change represents ~USD 0.7 million per month of operating cost – Risk related to fuel cost fluctuations is placed with the customer on a majority of contract work

• 35-

Jon Erik Reinhardsen

President & CEO

Capital Markets Day – Stronger in a Weak Market

Oslo, February 16, 2017

2016 Achievements

Improved capital structure to optimize competitive position

• Secured financial runway to 2020
• Reduced debt
• Reduced interest expense

Industry leading MultiClient performance

• Best in class sales/cash

investment ratio

• Best in class sales/book ratio
• Acquired DOLP MC library w/TGS

Excellent operational performance

• Operational performance of 95%
• Downtime of 2.7%
• TRCF and LTIF of 0.7 and 0.1

Took delivery of Ramform Tethys

• The third in a series of four
• Last new build due Q1 2017
• FCF will improve after last delivery

Continuing to enhance imaging capabilities

• Benefitting from superior

GeoStreamer technology

• Groundbreaking imaging

technologies

Reducing cost and capital expenditures further

• Cost reduced by another USD

131 million

• Low maintenance capex of USD

54 million

• 37-

PGS Corporate Strategy

A Clearer Image

To Care To Deliver Productivity Leadership To Deliver Superior Data Quality To Innovate To Perform Over the Cycle

• Ramform Platform + GeoStreamer
• Reducing project turnaround time
• GeoStreamer business platform
• Imaging quality and innovations
• Subsurface knowledge
• First dual sensor streamer solution
• First with 20+ towed streamer capacity
• Towed EM
• Unique reservoir focus solutions
• Focus on being best in our market segments
• Flexible cost base
• Strong MultiClient performance reduce cyclical

exposure

• For our employees
• For the environment
• For our customers’ success
• 38-

Corporate Strategy: Ambition to be Number 1 in All Business Areas

Operations

Productivity leadership

Operations supports Marine Contract and MultiClient with vessel resources and manages fleet renewal strategies

MultiClient

Diverse MultiClient library – Improving financial performance

62%* of 2016 revenues MultiClient initiates and manages seismic surveys which PGS acquires, processes, markets and sells to multiple customers on a non-exclusive basis

Imaging & Engineering

Technology differentiation – Rapidly becoming at par with industry best

9%* of 2016 revenues Imaging and Engineering processes seismic data acquired by PGS for its MultiClient library and for external clients on contract and manages research and development activities

Marine Contract

Marine market leadership

28%* of 2016 revenues Marine Contract delivers exclusive seismic surveys to

• il and gas exploration and

production companies

*Remaining 1% relates to Other revenues.

• 39-

Market Context: Sentiment Changing – Offshore Will Benefit

• Overall E&P spending expected to

increase in a similar pace in 2017 as in historical inflection points

• Only a marginal decline in offshore

spending in 2017 vs. 2016 is increasingly likely

– Continued deflation is likely to yield an increase in activity in 2017 vs. 2016 – Marine seismic has historically been early cycle mover

August 2016

• 10-15%

Estimated Y/Y change in offshore spending forecast January 2017 0-10% 2017: +7% 2010: +11% 2003: +10% Beginning of past 3 cyclical inflections y/y growth in %

Source to upper graph: Barclays Global 2017 E&P Spending Outlook. Source to lower graph: SEB Oil and Oilservice sector update 2017

• 40-

Market Context:

Sanctioned Capex Troughs - RRR Will Impact Exploration Capex

Source: Upper graph Goldman Sachs Top Projects 2016, lower graph SEB 2016 E&P Spending Survey.

• Significant decline in capex related

to project sanctioning during this downturn

– Through the trough in 2016 – Fundamentals benefit from a higher and more stable oil price – Significant cost reductions and efficiency gains improves oil companies’ cash flow position

• Reserve Replacement Ratio is

down to historical low levels

– Will have to be addressed

Annual decline rate

• f 25%
• 41-

Market Context: Marine Seismic Activity Expected to Increase in 2017

• Seismic activity is expected to increase ~10%

in 2017 compared to 2016

– Improved capacity utilization – Emerging release of pent up demand with more 4D tenders for the North Sea and West Africa – Growth primarily in MultiClient acquisition

• Significant supply reduction with streamer

capacity ~45% lower than at the 2013 peak

−

• Approx. 40% lower in 2017 summer season

with warm-stacked vessels coming back and delivery of Ramform Hyperion − Access to streamers will constrain supply further

Supply/demand balance likely to improve

• 42-

Summary:

Stronger in a Weak Market - Ambition to be Number 1 in all Business Areas Competitively Positioned to Navigate Current Market Environment

• Improved capital structure
• Industry leading performance
• Seismic activity expected to increase

in 2017

• Continuous focus on cost and capex
• 43-

Thank you – Questions?

Sverre Strandenes

Executive Vice President MultiClient

Capital Markets Day

Oslo, February 16, 2017

MultiClient manages and licenses seismic data that PGS acquires

• n a non-exclusive basis. The Company invests in the projects and

licenses the data to customers under a variety of business models

MultiClient – What Does the Business Unit Do?

• 46-

Outline

• What we have done to

strengthen our position

• Some MultiClient highlights
• MultiClient market perspectives
• Strengthening relative position
• Azimuth / Equity
• Summary

Stronger in a Weak Market

• 47-

• Focused, global business line from 2010
• Rigorous project selection, risk

management and focus on the financials

• Further integration of the Reservoir

group and Geology & Geophysics (G&G) expertise

• Better understanding of our clients’

needs, strategies & organizations

• Built strong relationships with

governments

• Leveraging operational and technological

capabilities

• Having the right people (motivated,

experienced)

What Have We Done to Strengthen Our Position

• 48-

What Governs PGS MultiClient Investments

Angola Namibe Basin 3D: a GeoStreamer seismic data example from an undrilled basin Angola Namibe Basin 3D: seabed image Top salt Campos Basin, Brazil

Identification

• Hydrocarbon potential /

prospectivity

• Access to acreage: license round,

lease roll, farm-ins, direct awards

• Political environment & fiscal

terms

• Timing
• Technology to address subsurface

mapping objectives

• Partner relations: governments,

JV, pre-funding client

Selection

• Business Unit independent Risk

Board process

• Financial ROI
• Robust Business plan
• Secured pre-funding
• Risk-reward profile – balanced

portfolio

49

Our G&G Expertise – PGS Reservoir

Understanding Prospectivity is a Critical Component of a Successful MultiClient Project Multi-skilled G&G teams, utilizing “state of the art” technology, providing exploration, development and reservoir services

• 50-

Key MultiClient Programs 2016

Canada: 6th season MC2D One MC3D program Brazil: MC3D in Ceara & Potiguar Basins Europe:

Active season in Northern and Central North Sea

Congo MC3D Cyprus MC3D Malaysia Sabah phase I MC3D New Zealand MC3D Egypt MC2D South Africa MC2D

40,000 km2 GeoStreamer MC3D and 50,000 km GeoStreamer MC2D added to library in 2016

40,000 km2 GeoStreamer MC3D and 50,000 km GeoStreamer MC2D added to library in 2016

• 51-

Highlights: Continue to Build Attractive Positions in Key Basins

• Europe

– Continued expansion in Europe stronghold in 2016 by adding 22,000 km2 of new GeoStreamer MC3D – Most productive European season – Titan class vessels and acquisition technology drove improved efficiency – PGS Europe library now > 100,000 km2 of GeoStreamer MC3D data – GeoStreamer Pure: Starting to develop new regional depth products in key regional hubs

• Congo

– Highly prospective country, with upcoming license rounds – Recent pre-salt discoveries generating high industry interest – PGS technology and expertise secure unique in-country position, including license round support – New MC3D planned in 2017 for future Shelf License Round

• 52-

Highlights: Continue to Build Attractive Positions in Key Basins

• Newfoundland & Labrador

– PGS/TGS Joint Venture continues to build on its unique footprint for a sixth consecutive season in Canada – Record breaking results from the second land sale under the Land Tenure System – oil companies pledged ~ USD 550 million for 8 parcels of land in the Orphan, Flemish Pass and Jeanne d’Arc basins – Companies showing interest in the 2017 call for bids in the Labrador South Region – detailed 5 x 5 km 2D grid available

• ver 10 parcels on offer
• Sabah, Malaysia

– First ever MC3D survey in Malaysia – Sabah Phase 1/2a (9,406km2) GeoStreamer MC3D acquisition ongoing with industry support – Licensing round opened in the area with strong interest expressed by industry for a significantly larger sized program – Parts of Sabah in JV with WG and TGS

• 53-

Eastern Mediterranean: Importance of Government Relations

• Strong position built over many years in Eastern

Mediterranean (Cyprus, Lebanon, Egypt, Greece)

• License round support and G&G expertise / training –

key elements in building strong relations with the Governments

• Cyprus:

– 2016 License Round awards expected in Q1 (3 blocks currently under negotiations) – Ongoing MC3D acquisition in Blocks 6/10 – Potential for further acquisition

• Lebanon:

– PGS MC3D well positioned within available blocks for the 2017 license round

• Egypt:

– License round opportunity 2017/2018 – New data available

• Greece:

– Awards expected Q1/2017 – New License Round potential 2018

• 54-

Continued, Stable Growth of Library

Volume of MC2D and MC3D acquired

• Around 40,000-50,000 km2 per year of new GeoStreamer MultiClient 3D data

added to the library in the past five years

• Maintaining global presence; some weakening of African market while Europe

and Americas continue their dominance

• Dolphin library acquisition jointly with TGS

10 000 20 000 30 000 40 000 50 000 60 000

2012 2013 2014 2015 2016 3D sq. km 2D Km

Europe 40 % Americas 38 % AsiaPacific 10 % AfricaMiddleEast 12 %

2016 Revenue Distribution

• 55-

MultiClient Business Model Continues to be Favored

• Why oil companies prefer MultiClient

– Enables acquisition start before block award – Rapid turn-around – Value in MultiClient model as a one-stop-shop

• from acquisition permits to data delivery

– Pricing flexibility / attractiveness

• Dynamic market: ability to rapidly switch

capacity between MultiClient and Contract

• pportunities favors vessel owners
• Hybrid projects are more than “converted

contracts”:

– Extending or including an area which would

• therwise require one or more Contract

projects into a MultiClient program with open acreage and/or areas with additional sales potential – Possibility to realize economy of scale and timing benefits – Converting a Contract project to MultiClient without further sales potential is not attractive

• Expect to allocate ~ 55% of 3D fleet to

MultiClient in 2017

(*) internal estimates

Hybrid projects - vessel owner territory % share of acquisition market

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 06 07 08 09 10 11 12 13 14 15 16

Percentage share of acquisition market

Year

Contract % MC %

MultiClient – Contract market split (*)

Contract MultiClient

• 56-

Technology Matters: Clients Requiring More From MC Data

• Increased Quality Demand

– Client demand for higher quality MC data increasing – With its increasing weight in our business, MC is becoming a showcase and focal point for PGS products and services

• Define Problem, Select Technology

– GeoStreamer & Imaging technology key success factors for modern PGS MC3D library – Ability to offer full range, from low cost to high end solutions, to meet diverse client demand in regional MC hot spots

• Safety, Quality and Efficiency

– Highest fleet wide safety standards – Pro-actively drive cost effective acquisition and imaging without compromising quality

• bjectives

Same HSE Focus Same Quality Same Efficiency Same Technology … every time

• 57-

Differentiation Becomes Key in a Challenging Market: PGS MultiClient Differentiators

• True broadband seismic: Multi-

component GeoStreamer fully implemented throughout the fleet

• True broadband seismic: Longer

shelf life and 4D ready data

• GeoStreamer driven Imaging

technology and capability at the forefront of the industry

• Geographically diverse library -

presence in all major hydrocarbon provinces

– Facilitating broad range of library deals from local to global

• Access to worlds highest

capacity seismic fleet

– Ideally positioned to play in the hybrid market – Can handle any opportunity

200000 400000 600000 800000

3D 2D

km2 (3D) / km (2D) MultiComponent GeoStreamer Conventional data

PGS MultiClient library

PGS has acquired more than 500,000 km2 GeoStreamer 3D data

• 58-

Maintaining Robust Library Performance in a Challenging Market

20 40 60 80 100 120 140 160 180 50 100 150 200 250 300 350 400 450 500 2011 2012 2013 2014 2015 2016

% Pre-funding USD million Prefunding Late sales PF %

0.5 1 1.5 2 2.5 3 100 200 300 400 500 600 700 800 2011 2012 2013 2014 2015 2016

Revenue / Cash Investment USD million Revenues Cash Inv. Revenues/Cash Inv.

Strong pre-funding Stable revenues / cash investment ratio

Revenues Cash Investment Net Book Value

Healthy share of industry 2016 MC revenues, cash investments and NBV’s PGS 24 % PGS 13 % PGS 17 %

• 59-

0.5 1 1.5 2 2.5

2013 2014 2015 2016 PGS Company A Company B Company C

Strengthening Relative Position

• Library performance

strengthened versus peers

• Geographical spread for

better risk management

• Lower cost and improved

efficiency drive returns in weaker market: more data per USD

• Technology advantage –

GeoStreamer & High End Imaging

Revenue / Net Book Value Revenue / Cash Investment

0.5 1 1.5 2013 2014 2015 2016

PGS Company A Company B Company C

• 60-

The Equity Business Model: Azimuth – PGS Equity Partner

• Occasionally oil companies

want to exchange license acreage in return for data or services

• PGS aims to divests its E&P

assets under commercial terms

• Azimuth develops acquired

E&P assets within its portfolio

• Azimuth is backed by

Seacrest Capital Group, a leading private equity group with high quality largely US based investors

• PGS has ~45% minority
• wnership position in

Azimuth

• Drives further value from the

MultiClient library at arm’s length distance

Norway Platform 20 licenses UK Platform 14 licenses Ireland Platform 3 licenses Lat-Am Platform 2 licenses West Africa Platform 6 licenses SE Asia Platform 2 licenses, 3 JSA’s

• 61-

Summary

• Challenging market with tough

competition in the MultiClient space

• PGS has strengthened its

relative position

– Right people – Superior vessel operator – Technology that differentiates – Market leading imaging capabilities

• Expect 2017 MultiClient 3D fleet

allocation of ~55 %

• Expect 2017 MultiClient cash

investment level of ~USD 275 million with a pre-funding level of ~100%

Stronger in a Weak Market

• 62-

Marine Contract and Operations

Per Arild Reksnes, Executive Vice President Operations

Capital Markets Day

Oslo, February 16, 2017

Marine Contract work is where PGS acquires seismic data under proprietary contracts with its customers, and covers Streamer Seismic, Towed Streamer Electromagnetics and Permanent Reservoir Monitoring

Marine Contract – What Does the Business Unit Do?

• 64-

Operations – What Does the Business Unit Do?

Operations runs and develops the PGS fleet and is committed to support Marine Contract and MultiClient with safe, reliable and efficient acquisition services

• 65-

Outline

• What we have done to strengthen
• ur position
• Activity outlook
• Supply and demand
• Competitive landscape
• An industry leading fleet
• Towed Streamer Electromagnetics
• Summary
• 66-

Safety First Safety performance among industry leaders

IAGC 2015:

TRCF - 1,17 LTIF - 0,31

• 67-

First on Data Quality with True Broadband Consistently delivering superior data quality

• 68-

A Track Record Speaking for Itself

Ramform Titan:

• daily production up to 175 sq.km using 18 streamers at 100m

separation - offshore Myanmar

Ramform Tethys:

• Has deployed the most streamers of any vessel: 129 kms -
• ffshore Norway

Ramform Atlas:

• Successful completion of survey in very challenging weather
• ffshore Colombia, using 12 streamers x 10 km length with 100m

separation

Ramform Sterling

• 17 streamers x 3.6 km x 50m separation, 4D North Sea

Sanco Swift

• Kept the streamers in water continuously for 182 days during the

first survey for PGS, offshore Norway

PGS’ fleet is moving the goalposts for seismic acquisition

• 69-

Operational Uptime Continues to Lead

Performance = actual production of seismic in % of available production time Industry Leading Performance

82 84 86 88 90 92 94 96 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

• 70-

Converting Operational Prowess into Customer Satisfaction Ranked #1 marine seismic contractor with large majority of IOCs

• 71-

Demand Outlook Western Atlantic

Awards in East Canada license round Mexico lease sale – more activity to follow US Gulf of Mexico – low activity as interest shifts south to Mexico Recent large discoveries and new exploration licence offerings in Guyana and Suriname Brazil – several 4Ds planned to be acquired in 2017 Southwest Atlantic slow for new work, but some activity in Uruguay in 2017

Several new licenses awarded and likely increased 4D activity in Brazil

• 72-

Demand Outlook Eastern Atlantic and Middle East

4D market substantially stronger in 2017 compared to 2016 North West Africa – Mauritania is a hotspot with 20,000 sqkm ongoing

• r planned for 2017

West African margin – several 4D projects cancelled earlier are being resurrected – many with multicomponent baselines and monitor surveys Namibia, South Africa – still activity, but at quite a low level pending discoveries Barents Sea remains a high interest area but Russian Arctic remains restricted due to sanctions Congo to be active with a license round and rejuvenation of play models East African margin – Mozambique will see very substantial activity in 2017, but mostly MultiClient Eastern Mediterranean buoyed by licence commitments in latest round in Cyprus, and recent giant gas discovery in Egypt

A very active region with high 4D activity and good opportunities

• 73-

Demand Outlook Asia Pacific

Myanmar: Still some activity, but much reduced from bumper year in 2016 India: 2-3 vessels through the season Sakhalin: relatively low activity expected for 2017 Malaysia – stable high activity, consistent flow of tenders Indonesia – activity rising recently Australia: Quite high activity, mostly on the North West shelf, and mostly MultiClient New Zealand still attracting interest – 2 vessels this winter, projects cancelled in 2016 are now back on track

Moderate, but consistent level of activity

• 74-

Production Seismic Expected to Increase in 2017

• Oil companies investing more in

producing fields and fields under development

• Number of production seismic (4D)

projects will more than double in 2017 compared to 2016

• 4D activity expected to increase in

North Sea, West Africa and Brazil

• PGS is well positioned in the 4D

market due to the Ramform fleet, steerable sources and streamers and GeoStreamer

Number of 4D projects

• 75-

Visibility Starts Building into Coming Summer Season

• Significant reduction in activity

levels since 2013 has impacted pricing severely

• Currently good inflow of sales

leads in Q1

• 1H 2017 will remain challenging
• n rates
• Industry booking starting to

improve

• 76-

PGS Fleet Well Positioned on the Industry Cost Curve

• Significant industry capacity

reduction

• Approx. 30 3D vessels

expected to be active most

• f 2017
• PGS retains lead on lowest

cash cost per streamer

PGS vessels Competitors’ vessels Source to both graphs: PGS internal estimates. The cash cost curve is based on typical number of streamer towed, and excludes GeoStreamer productivity effect. The graph shows all seismic vessels operating in the market and announced new-builds. The Ramform Titan-class vessels are incorporated with 16 streamers, S-class with 14 streamers.

Industry streamer capacity

• 77-

Most of the Stacked Capacity Will Not Come Back

• Industry capacity reduced by ~45% since

the peak in 2013 – and the vessel retirements have generally been as predicted from the cost curve

• Due to the weak market, several modern

efficient vessels have been stacked for strategic or company specific reasons

• PGS estimates ~100 streamers’ worth of

stacked capacity likely to return in a normalized market

• 78-

The Common Challenge of The Marine Seismic Industry

• Streamers comprise the biggest

single capex element for seismic vessels

• Very little manufacturing of new

streamers since 2013

• Streamers on cold stacked vessels

have been reused on active vessels

• Given 600 active streamers in 2013

and streamer lifetime of 7-10 years indicates that there are few extra spare streamers on cold stacked vessels or in stores To reintroduce a cold stacked vessel may require a streamer investment of ~USD 50 million

Streamer count – world active fleet

100 200 300 400 500 600 700 2013 2014 2015 2016 2017 2018 2019 2020 Number of streamers

7 yrs llife 10 yrs life

• 79-

Flexible capacity: High-end Ramforms

Atlantic Explorer

PGS Seismic Fleet 2017

Active vessels = Ultra High-end Ramforms and High-end Conventional Vessels

The Ultra High-end Ramforms

Ramform Challenger (cold stacked Q4 2015) PGS Apollo

2D/EM/Source

Ramform Vanguard (warm stacked winter 2016-17) Ramform Explorer (cold stacked Q3 2015) Ramform Valiant (cold stacked Q4 2015) 2015) Ramform Viking (cold stacked Q4 2015) Sanco Swift Delivery Q1 2016 Ramform Sovereign Ramform Titan Ramform Atlas Ramform Tethys

PGS average active fleet age/streamer count: 4.5 yr/14.2

Competition average fleet age/streamer count: 9.3 yr/12.2

Ramform Sovereign Ramform Sterling

High-end conventional (chartered)

Sanco Sword Cold stacked Ramform Hyperion

• 80-

Fleet Structure Provides Flexibility Through the Cycle

• Combination of chartered high capacity conventional 3D vessels and temporarily

cold-stacked first generation Ramform vessels:

– Improves fleet flexibility – Chartered capacity with staggered expiry structure – Positions PGS well to take advantage of a market recovery

Significantly reduced capex requirement going forward

2018 2019 2022 2023 2024 2025

The Ultra High-end Ramforms

Ramform Hyperion Ramform Tethys Ramform Atlas Ramform Titan Ramform Sterling Ramform Sovereign

High-end Conventional on Charter

Sanco Swift - in operation

3x2 years option

PGS Apollo - in operation

5 years option*

Sanco Sword - cold stacked

3x2 years option

High-end Ramforms - Flexible Capacity

Ramform Vanguard - warm stacked Ramform Valiant - cold stacked Ramform Viking - cold stacked Ramform Challenger - cold stacked Ramform Explorer - cold stacked

*With possibility to buy back after year 5 and 8

2020 2021 2026 2017

Construction In operation Option period Charter period

• 81-

PGS Fleet – Covering All Bases

# of streamers

4D 25 50 75 100 125 150 175 200 8 10 12 14 16 18 20 22 Titan- class S- class High density 3D Sanco- class Reconn- aissance 3D Exploration 3D

Streamer separation (m)

Increasing efficiency/decreasing quality Increasing quality/increasing efficiency

V- class

• 82-

A Strong Market Position

• PGS increases its market share

to ~33% in 2017

• Lowest average age of active

fleet in the industry

• PGS has the only fleet fully

equipped with the latest technologies:

– Multicomponent streamers – Streamer steering – Source steering – 12+ streamer count

Ready to capitalize on market recovery

• 83-

Towed Streamer Electromagnetics Unique value proposition:

• Data acquired with the same

efficiency as Towed Streamer Seismic

• Superior data density for

accurate mapping of sub-surface resistivity

• Integration with seismic data is

key to unlocking the value of EM data

• Increasing number of license

commitments referencing EM

• Resolved patent dispute with

EMGS (April 2016)

Integrated products and services provided under license from Rock Solid Images Inc, to patent numbers US8064287, US7912649 and US12/135,729 and their related families

From regional-scale exploration… …to reservoir characterisation

• 84-

Summary

• #1 position with major customers
• Market visibility building for the summer

season

• H1 – 2017 will be challenging on rates
• PGS has a competitive fleet and a strong

market position:

– All vessels equipped with GeoStreamer – Leading on age and capacity – Reinforced position on the cash cost curve – Titan class vessels setting the standards for the next 25 years – PGS inactive fleet ready for the upturn, with some lead time to build new streamers

Seizing the opportunity to strengthen PGS’ position in a weak market

• 85-

Guillaume Cambois

Executive Vice President, Imaging & Engineering

Capital Markets Day

Oslo, 4th December 2015

Capital Markets Day

Oslo, February 16, 2017

Imaging & Engineering – What Does the Business Unit Do?

I&E has two departments: Imaging provides a full range of data processing, advanced imaging, and reservoir-related processing services to a global exploration and production customer base – and to PGS’ MultiClient business Geoscience & Engineering constitutes PGS’ R&D center

• 87-

Outline

• What we have done to strengthen our position
• Key metrics
• Highlights
• GeoStreamer and 4D
• Going forward
• 88-

What Have We Done to Strengthen Our Position

• Pioneer broadband imaging

– First access to GeoStreamer data – Develop and patent differentiating tools – Set new standard for broadband images

• Deploy groundbreaking technologies

– hyperBeam: Hart’s E&P 2010 Special Meritorious Award for Engineering Innovation – SWIM: 2015 Best Paper in The Leading Edge – Next generation imaging algorithms using shared- memory architecture

• Increase computer throughput

– Leader in shared-memory computer architecture – Abel: Cray XC40 installed in 2015 (still ranked 22

• n the Top 500 list)

– Galois: Cray XC30 installed in 2016

• Deliver consistent quality of services

– Focus on training and project management – Develop a network of geophysical expertise – Define and implement unique workflows

Authors of The Leading Edge 2015 best paper award: Dan Whitmore, Nizar Chemingui, Shaoping Lu, Alejandro Valenciano Jostein Lima and Kevin Sherwood accept the Special Meritorious Award from Hart’s E&P Editor Rhonda Duey

• 89-

Quality and Customer Satisfaction Steadily Improving

Average Rating

2 = Excellent Performance 1 = Above Expectations 0 = Met Expectations

• 1 = Below Expectations
• 2 = Poor Performance

Clients rate all completed imaging projects across 10 categories

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 2012 2013 2014 2015 2016

• 90-

20 40 60 80 100 120 140 2011 2012 2013 2014 2015 2016

USD million

Revenue excl. MultiClient work

Imaging External Revenue Follows Market Downturn

• Imaging market down

following decrease of square kilometers acquired and streamer capacity

• Market share increasing

slightly

• Smaller competitors going
• ut of business
• MultiClient work sustained

year on year Resilience driven by GeoStreamer, high-end imaging and productivity improvements

• 91-

R&D Spending Scaled to Adapt to Market

• R&D focused on Imaging

technologies and GeoStreamer improvements

• Committed to innovation,

efficiency and safety

• Sustained by dedicated,

reliable pioneers

Focus on differentiation and productivity

$0 $10 $20 $30 $40 $50 $60 $70 $0 $200 $400 $600 $800 $1 000 $1 200 $1 400 $1 600 2012 2013 2014 2015 2016

USD million USD million PGS Revenue Total R&D+Sup.

• 92-

Imaging & Engineering Highlights 2016

• Triton full-azimuth Gulf of Mexico survey delivered
• n time with quality that confirms the superiority of

GeoStreamer acquisition design

• Full 3D Pre-Stack Time Fast-Track migration of

14,677 sq.km. completed successfully for the first time onboard a vessel and delivered within days of last shot

• Additional Cray supercomputer in Houston

increases PGS leadership in shared-memory architecture

• Next generation anti-barnacle equipment

successfully tested on the fleet

• 93-

Normalised based on traverse kms

Workboat Barnacle Cleaning Standby Hours for Barnacles

Focus on Barnacles for Improved Safety and Performance

• Less workboat exposure for barnacle scraping
• Dramatic reduction in barnacle related standby
• Reduced noise in GeoStreamer records
• Significant increase in average vessel speed
• 94-

GeoStreamer Led Industry to Adopt Multi-Component Streamers

BroadSeis 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 GeoStreamer launch (2D) First 3D vessel Entire PGS fleet equipped

SWIM

Sentinel MS First 3D vessel

Clients

WG CGG/Sercel

Broadband bids Multi-Component streamer bids Sixth 3D vessel IsoMetrix 3D vessel DiscOver ObliQ Third 3D vessel Second 3D vessel

Multi-Component streamers offer far more benefits than just broadband seismic Competitors

• 95-

GeoStreamer: Setting New Standards in Imaging

Recent advances in GeoStreamer imaging helped rejuvenate the North Sea

Legacy Time Imaging GeoStreamer Depth Imaging

• 96-

GeoStreamer Improves Repeatability of 4D Surveys

• 4D surveys are meant to capture changes in fluid contents within producing reservoirs
• The seismic response to reservoir changes is often a very weak signal
• Repeatability in acquisition and imaging is critical to minimize 4D signal interferences

– Steerable streamers and sources – Permanent installations required in extreme cases

• Some factors are inherently non-repeatable

– Weather and sea-surface swell

Base survey Monitor survey Difference x5

• 97-

Hydrophones Record the Non-Repeatable Sea-Surface Swell

Base Monitor

• 98-

GeoStreamer Wavefield Separation Isolates Sea-Surface Swell in Down-Going Wave Making Up-Going Wave More Repeatable

Base (up-going) Base (down-going) Monitor (up-going) Monitor (down-going)

• 99-

GeoStreamer Provides Clearer Images of Fluid Changes

4D signal using conventional hydrophones 4D signal using GeoStreamer up-going wave

• 100-

The Life Cycle of Seismic Surveys

Exploration 2D seismic Exploration 3D seismic Shallow hazard survey Development 3D seismic Site survey Baseline 3D survey for time-lapse seismic Repeat surveys

Traditional paradigm: a series of “fit-for-purpose” (i.e., limited purpose) surveys

GeoStreamer 3D seismic

GeoStreamer paradigm: a single “full-purpose” survey used for exploration, development, shallow hazards, site surveys and baseline for 4D seismic and reservoir monitoring

GeoStreamer reduces total E&P costs and shortens field development cycle-time

Repeat GeoStreamer surveys

• 101-

Imaging Going Forward

• Remain focused on quality and client satisfaction
• Leverage large PGS fleet for data access
• Use increased computer capacity and shared-memory to enhance image quality
• Introduce new groundbreaking technologies

– Expanding on GeoStreamer capabilities – Using compute power to automate imaging tasks

• 102-

Imaging & Engineering: Best Positioned to Benefit from Upturn

• Current market low following decrease in acquired 3D marine data

– Smaller competitors going out of business – PGS resilience due to unique technology, quality of services and MultiClient investments

• Marine market rebound will favor multi-component streamers

– GeoStreamer recognized as the leading technology – PGS fleet fully equipped with GeoStreamer – PGS Imaging the reference for multi-component streamers

• PGS new imaging algorithms fully harness the power of multi-component streamers

– SWIM: Separated Wavefield Imaging – FWI: Full Waveform Inversion – Improved 4D repeatability

• Shared memory computer architecture a step change in Imaging throughput

– PGS has a head start with Cray supercomputers

• 103-

Concluding Remarks - Jon Erik Reinhardsen

President & CEO

Capital Markets Day – Stronger in a Weak Market

Oslo, February 16, 2017

Stronger in a Weak Market

• MultiClient:

– Fleet and GeoStreamer technology position PGS well to take advantage of a changing MultiClient market – Financial performance of MultiClient continues to improve – Prudent MultiClient risk assessment in place

• Marine Contract:

– Ranked #1 marine seismic contractor with large majority of IOCs – Increasing market share, reducing average fleet age and reinforcing position on cost curve – Strong position in the 4D market

• Operations:

– Industry leading HSE and operational performance – Improving towing capabilities – moving goalposts for seismic acquisition – Flexible vessel capacity to fill all roles

• Imaging & Engineering:

– Pioneering broadband imaging and deploying groundbreaking technologies – Quality and customer satisfaction steadily improving – Committed to innovation to improve data quality and vessel productivity

• 105-

In Conclusion

PGS - stronger in a weak market

• Improved capital structure to optimize

competitive position

• Reducing cost and capital expenditures

further

• Industry leading MultiClient performance
• Strong operational performance
• Improving fleet flexibility and productivity
• Continuing to enhance imaging capabilities
• 106-

Thank you – Questions?